The Department of Health and Human Services (HHS) has issued final regulations setting forth standards for employers to appeal an exchange's determination that a full-time employee is eligible for a premium tax credit. Full-time employees determined by the exchange to be eligible for premium tax credits will eventually trigger employer shared responsibility penalties. Accordingly, employers will want to ensure that they are prepared to challenge an incorrect eligibility determination.

REINHART COMMENT: Employers may want to consider challenging incorrect eligibility determinations in 2014, even though such determination will not trigger penalties, to avoid setting a precedent for 2015.

The final regulations generally finalize the proposed regulations published in January 2013 and describe the process by which employers may appeal an exchange's determination of an individual's eligibility for premium tax credits or cost sharing reductions. Additionally, the final regulations clarify that employers may receive notice of employee eligibility for premium tax credits on an employee-by-employee basis or for groups of employees. For notices issued for 2014, HHS notes that the exchanges should clarify in these notices that employers will not be liable for any penalties under Code section 4980H (the employer shared responsibility provision).